Facebook officially jumped on the cryptocurrency bandwagon on June 18, 2019, with Mark Zuckerberg himself unveiling the whitepaper of highly anticipated digital currency project Libra. The whitepaper released by Facebook speaks about the ardent initiative of the project to disrupt the global financial system. Facebook aims to launch their crypto coin Libra in 2020 and it aims to become a friction-free global currency that can be accessed by the 1.7 billion people who have no access to banks.
However, only time will tell if Libra will become a boon to billions of people or not.
The social media giant’s entry into the crypto landscape has enhanced the credibility of virtual currencies, primarily the Bitcoin, which can propel its global adoption. Mark Mahaney, an analyst at RBC Capital Markets, believes that in “terms of scale and importance,” Facebook’s new financial infrastructure announcement is similar to “Apple’s introduction of iOS to developers over a decade ago.”
Let’s take a dive in to understand how Facebook’s Libra will have an impact on the crypto industry.
Financial Regulators May Initiate Much Needed Cryptocurrency Dialogue
There has to be more regulatory engagement with cryptocurrencies, but most financial regulators have been averse to starting a dialogue on virtual currencies. They not only have failed to see the pros of cryptocurrencies but also have deemed them illegal. With a giant like Facebook dipping their toes in crypto space regulators are forced to come to the discussion table, albeit reluctantly. Financial regulators cannot ignore that Facebook’s vision of a new global currency has far-reaching implications for the central banks across the world.
Legitimize Cryptocurrency Industry
Crypto traders believe that digital currencies might potentially see a widespread adoption if major tech companies endorse the virtual currency industry. Hence, Facebook has also brought the digital currency into the mainstream, which will also help it gain legitimacy over time. Once the industry gets the legitimate status, there is likely to be widespread adoption of cryptocurrencies, and some countries might lift the ban on them.
Positive Impact on Cryptocurrency Demand
There was a surge in demand for Bitcoin following Facebook’s announcement of its global currency. The demand is likely to sustain for some time. The social media giant’s reach and its 2.7 billion users enable more people to become familiar with the virtual currencies, which will ultimately lead to an increase in demand.
Moreover, the launch of Libra by the end of June 2020 may usher in a new wave of users and adopters. It is expected that Facebook’s cryptocurrency may attract an entirely new base of customers, who may not have bank accounts. They may enjoy the financial freedom offered by the cryptocurrencies. The other silver lining of Facebook’s entry is that it is going to revive interest in digital currency.
